Answer for Table Deskis Incorrect units Incorrect $190 per unit Incorrect Answer for Table is: Incorrect Incorrect Correct 41. Activity-Based Costing Versus Traditional Approach, Activity-Based Management a. The cost per unit for direct materials is calculated as follows: Desk Total direct material costs (a) Units produced (b) units Direct material cost per unit (a) (b) per unit The cost per unit for direct labor is as follows: Desk Total direct labor costs (6) Units produced (d) units Direct labor cost per unit (C) (d) Table Incorrect Incorrect Incorrect Incorrect Incorrect Correct units $160 per unit per unit b. (1) The rate is calculated as: Estimated overhead cost Estimated activity in allocation base estimated overhead estimated direct labor costs Incorrect Incorrect 300% of direct labor costs Table Desk Answer for Deskis Incorrect Incorrect Incorrect Answer for Tables Incorrect Incorrect Correct Direct labor cost per unit calculated above (e) Overbead rate as % of direct labor cost ( Overhead cost per unit(e) x ( per unit $480 per unit (2) Per unit product costs are calculated as follows: Desk Direct materials (from purta) Direct labor (from parta) Overhead Total product cost per unit Table Incorrect Incorrect Incorrect $830 per unit incorrect Incorrect Incorrect Incorrect Correct per unit Inkjet Printer Laser Printer 5320,000 Tour durch material costs Units produced Direct material cost per unit (a) (b) 5540,000 12.000 units 45 per unit 4,000 Bo per The cost per unit for direct laboris as follows: Inkjet Printer Laser Printer Total direct labor costs ic) Units produced id Direct labor cost per unit (c)(d $ 600,000 12.000 units 50 per unit $ 400,000 4,000 units 100 per un 2 a The plantwide allocation used by Parker Company is based on direct labor hours. The predete overhead rate is calculated as follows: Estimated overhead cost $1,050,000 Estimated activity in allocation base 25,000 hours = $42 per direct labor hour Because the inkjet printer requires 1.25 direct labor hours to build and the laser printer takes 250 din labor hours to build (both figures are provided in the problem data)$52.50 in overhead is allocated to 1 unit of the inkjet product (= 542 rate x 1.25 hours) and 5105 in overhead is allocated to 1 unit of the laser product (542 rate x 2.50 direct labor hours). b. Per unit product costs are as follows: Direct materials Direct labor Overhead Total product cost per unit Inkjet Printer Laser Printer Direct materials and direct labor determined from Question 1. S5250 = 1.25 direct labor hours per unit X $42 rate. $105=2.50 direct labor hours per unit x 542 rate. $ 45.00 50.00 52.50 $147 50 S 80.00 100.00 105.00 $285.00 e How much did the profit per unit change for each 41. Activity-Based Costing Versus Traditional Approach, Activity-Based Management. Fine Finishing, approach to the activity-based costing approach? What caused this change! overhead costs of 56.000.000 were allocated based on direct labor costs. Direct labor costs totaled $2.000,000 last year, and the company produced 15.000 desks and 5,000 tables. Total direct laborand Desk Table Direct materials $1,575,000 $950,000 Direct labor $1,200,000 $800,000 The management of Fine Finishing, Inc. would like to use activity-based costing to allocate overhead rather than one plantwide rate based on direct labor costs. The following estimates are for the activities and related cost drivers identified as having the greatest impact on overhead costs. Estimated Cost Driver Activity Activity Cost Driver Estimated Overhead Costs Desk Table Total Purchase orders Machine setups Machine maintenance Quality inspections Total 1,000 Number of purchase orders $ 800,000 Number of setups 1,600,000 Machine hours 2,400,000 Number of inspections 1,200,000 $6,000,000 900 240 42,000 15,000 100 260 18,000 5,000 500 60,000 20,000
